Those who had doubts must introspect: Jaitley on Moody's upgrade for India

Those who had doubts must introspect: Jaitley on Moody's upgrade for India

Those who had doubts must introspect: Jaitley on Moody's upgrade for India

Moody's Investors Service upgraded its ratings on India's sovereign bonds for the first time in almost 14 years on Friday, saying continued progress on economic and institutional reform will boost the country's growth potential.

The decision to upgrade the ratings is underpinned by agency's expectation that continued progress on economic and institutional reforms will enhance India's high growth potential and will contribute to a decline in the government debt.

"It is a major worldwide recognition of major economic and institutional reforms undertaken by the Government of India", he said while addressing a press conference here.

The upgrade has not happened in isolation and for the last three years the India has been the fastest growing major economy, he added. However, the other two global rating agencies - Fitch and Standard & Poor's - maintain a BBB- rating with a stable outlook for India.

Here are four main points based on which Moody's upgraded India's credit ratings. It also claimed that India's growth potential superseded that of many other sovereign nations.

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The "Baa3" rating was the lowest investment grade - just a notch above "junk" status.

The agency said the reforms initiated by the Indian government could improve the business climate, productivity, stimulating foreign and domestic investment, and hence fostering strong and sustainable growth.

It, however, said the high public debt burden remains an important constraint on India's credit profile relative to its peers, notwithstanding the mitigating factors which support fiscal sustainability.

Commenting on Moody's upgrading India to Baa2, from Baa3, he said it is a recognition that India continues to follow the path of fiscal prudence which has brought stability to the economy. "The rating agency too has now confirmed it formally, which is welcome".

The finance minister said that the government's emphasis was on "implementation and reaping benefits of the growth process".

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